As for the end of the Bush tax cuts, that’s due to the Republicans trying to use Enron accounting for the budget. They assumed they’d be able to extend them permanently even though that would have been 10 years in the future. Just like Enron saying the receive leg of their swaps would always turn around in enough time to make their earnings goals.

And if we move to a VAT, keep in mind two points. First, Europe uses the VAT to supplement the individual and corporate income taxes. Second, we’d see a wave of VAT tax shelters, just like Europe. There are such things, I’ve seen them pitched by accounting firms.

]]>By: OldBullhttp://blogs.reuters.com/james-pethokoukis/2010/07/12/vat-attack-will-business-go-for-it/comment-page-1/#comment-8509
Wed, 14 Jul 2010 07:49:56 +0000http://blogs.reuters.com/james-pethokoukis/?p=4192#comment-8509VATfan, it’s not a good sign when you start out with an inaccurate statement. There is no consensus that “we need stimulus in the short-term.” If anything, there is consensus that the stimulus didn’t, won’t, and can’t. As for the VAT being “the best way to increase taxes,” that is a conclusion, not a statement of fact. And you must be incredibly naive if you believe that this Congress is going to cut personal and corporate income taxes. If a VAT is one possible answer, why isn’t a flat tax or fair tax another? I notice also that you make no mention of another possibility, to wit, reducing spending. Not to worry, though, the largest tax increase in history is scheduled to arrive on January 1, 2011.
]]>By: VATfanhttp://blogs.reuters.com/james-pethokoukis/2010/07/12/vat-attack-will-business-go-for-it/comment-page-1/#comment-8506
Mon, 12 Jul 2010 20:25:54 +0000http://blogs.reuters.com/james-pethokoukis/?p=4192#comment-8506Jim, There is consensus that we need stimulus in the short-term, and after recovery begins we will need more revenue, as the U.S. government now spends 3 dollars for every 2 collected and the spread will grow. The VAT is the best way to increase taxes, as unlike the corporate income tax, it will reduce a U.S. disadvantage in world trade. The best way to introduce the VAT would be with a personal income tax cut and replacement of most or all of the corporate income tax in a revenue-neutral position. The expectation of a future time-certain rise in the VAT would act as a short-term stimulus to consumption which would assist in economic recovery. More VAT info at http://www.vat-us.com
]]>